JSE recovers to post small gains on extended stimulus

The JSE recovered earlier losses to close little changed on Thursday, with global markets and most local stocks boosted by the prospect of continued quantitative easing.

Local data on the day once again pointed to a weak start for the economy in the second quarter, but the focus was on the European Central Bank (ECB), whose interest-rate decision and resulting commentary led the euro to plummet 1% against the dollar.

The ECB said it would likely end its massive bond-buying programme in December, subject to data, but its forward guidance on interest rates was widely seen as dovish.

Local interest-rate and rand-sensitive stocks extended earlier gains in the afternoon. Rand hedges were weaker, however, as the local currency pulled back from six-month lows against the euro and the dollar.

Domestic news was less upbeat, with mining contracting 4.3% on an annualised basis in April, which was, however, less than the 5% drop forecast by economists. “The number is not entirely surprising given persistent uncertainty around potential changes to the yet-to-be-announced Mining Charter,” said FNB senior economic analyst Jason Muscat.

Mining stocks were mixed, despite this. Diversified miners fell, while platinum and gold shares both pushed higher due to firmer precious-metal prices. Gold is seen as a hedge against loose monetary policy.

It also emerged that electricity tariffs should rise far more than the 5% increase already set for 2018, after regulators agreed Eskom could recoup some of its expenses for previous years. This comes amid ongoing stoppages at the power utility, whose workforce has rejected a zero-percent wage increase.

The all share edged 0.1% up to 58,495.7 points, while the top 40 was flat. Platinums lifted 3.08%, general retailers 1.67% ,and banks 1.51%. Industrials fell 0.27%.

Impala Platinum jumped 4.69% to R23 and Northam 4.2% to R35.74.

Sibanye-Stillwater gained 1.53% to R8.60, having earlier reported it had located the body of the fifth miner who died at its Kloof Ikamva mine.

FirstRand gained 3.47% to R63.22 and Barclays Africa 1.82% to R165.68.

Mr Price gained 3.23% to R245 and Truworths 2.47% to R83.

Naspers slipped 1.71% to R3,335.

Shortly after the JSE closed, the Dow was flat at 25,216.85 points, while in Europe, the export-heavy DAX 30 had jumped 1.64%, the CAC 40 1.44%, and the FTSE 100 0.87%.

At the same time, platinum had added 0.87% to $907.80 an ounce and gold 0.44% to $1,305.40. Brent crude was 0.53% lower at $76.09.